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Gas Price Jumps up a Nickel

Average price around the country is $2.30 a gallon.

February 21, 2007, 07:00 pm

WASHINGTON -- The average price of gasoline skipped ahead 5.5 cents over the past week, to $2.296 per gallon, the third consecutive week of price increases, reported USA Today, citing a report by the U.S. Energy Information Administration.

The trend is the signal of the price increases that result in the push in prices the usually tapers off in May, however has lasted through the summer for the past two years, the report stated.

"We don't see any indication that we're headed toward $3," as in the past two years, EIA senior analyst Mike Burdette told the paper. For the upcoming spring and summer season, "Realistically on a given day or week we could see $2.60," he added.

"We may see ($3) in our lifetimes, but I don't see it in the cards for 2007," said Peter Beutel, head of energy price consultant Cameron Hanover. He predicts that gas prices will see peaks of $2.65 this upcoming season.

Because demand increases during the summer -- about 10 percent according to Burdette -- U.S. petroleum companies outbid other buyers on the world market for gasoline, which drives up prices. Gas retailers all around the country struggle to keep the prices low, while still turning some profit.

"In South Paris, Maine, where I hang out, the street (retail) price is $2.20; rack (wholesale) price is $2.15, and to get it there is more than 3 cents, so I'm left with just over a penny profit," Jinger Duryea, operator of dozens of convenience stores, told USA Today.

In addition, she estimated that 70 percent of her customers use debit or credit cards. "When they're finished with me, I'm losing 4 cents a gallon" due to interchange fees charged by the banks. "If prices go up, no one out there is salivating more than the credit card companies."

She also stated that motorists don't consider the taxes that make up the cost of every gallon: "The state government is getting about 27 cents, the federal government is getting 18 cents and I'm getting 100 percent of the blame."

The only two years that gasoline averaged more than $3 across the country was the past two years. The first time, one week after Hurricane Katrina demolished the Gulf Coast, gasoline topped $3.06 per gallon, and in 2005, prices peaked at $3.03 on Aug. 7.

The EIA showed that West Coast gasoline retailers had the highest prices, up six cents to $2.60 per gallon. The cheapest gasoline was in the Gulf Coast, where gas increased 4 cents to $2.13 per gallon.